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Times: Mortgage Resets Are Already Hitting The Market

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From The Times

July 6, 2007
Cheap mortgage era
with rate rise
The Bank’s move comes as many homeowners are hit by an abrupt end to cheap mortgage deals that have so far insulated them from the four previous rate rises.
Some 750,000 borrowers will reach the end of two-year fixed-rate loan deals, taken out when base rates were just 4.5 per cent, before the end of the year. They face a stark choice between a costlier variable rate from their lender, or switching to a new, but much more expensive, mortgage fix.
It is only in recent weeks that the cost of repayments for new fixed-rate loans has become more costly than for existing mortgages
, as past rate increases have been factored into the cost of credit by money markets. As leading business groups sounded warnings that the Bank was risking interest rate “overkill”, the Council of Mortgage Lenders said that ever more people were set to be hit by the expiry of their fixed-rate deals.
two million or more borrowers who are due to see such deals run out over the next 18 months
face steep increases in repayments. “Inevitably this will leave more households financially stretched,” Michael Coogan, the council’s director-general, said.
His caution came after official figures last week showed that households were already saving the smallest fraction of incomes than at any time since 1960....../

That which fuelled Gordon's boom, cheap and easy credit, is over. Let the crash begin in earnest.

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did you see the couples complaining about not being able to afford another rate hike yesterday?

these rate hikes arent good for GB's popularity- can you see him exerting some pressure on the MPC to hold / cut rates?

maybe he could take a few items out of the inflation basket- like oil :P

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